If you take out a conventional mortgage loan in Virginia, you may be required to pay private mortgage insurance. Known as PMI for short, this insurance protects the lender from making a loss in case you fail to make your mortgage payments. Typically, Virginia private mortgage insurance is usually required if you put less than 20% down payment for the home of if you are refinancing and your equity is less than 20% of the home’s value.
More often than not your Virginia lender will add the PMI premium to your monthly mortgage payment. But you can opt to pay it as an upfront lump sum or a combination of both. While an upfront payment will ease the burden, in case you refinance or move you may not be entitled to a refund. If you want to know more about strategies for paying PMI in Virginia talk to us and our experts here at Moreira Team will guide you.
How much should you expect to pay on your Virginia private mortgage insurance? Generally, costs range between 0.5 and 1% of the total loan amount per month. So for a $150,000 loan, you may have to pay as much as $1,500 per annum or $125 per month. It might seem a lot, but there are actual benefits of paying PMI.
First of all, for most homebuyers, it is an easy channel to qualifying for a mortgage loan. If you can’t make 20% down payment, you can still qualify for a conventional mortgage by agreeing to pay PMI. Additionally, you are likely to enjoy lower interest rates on your mortgage because the lender already has a cushion from a loss in form of the PMI. Otherwise, they would resort to charging you higher interest rate to recover their investment sooner rather than later.
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As you might expect, PMI also comes with some downsides. Your monthly payments will be higher, it may not be deductible, and it is hard to cancel. The best way to know whether to save for a large down payment or go for the PMI option is to have a real expert break down the costs and benefits for you. Moreira Team can do that. Simply get in touch with us, and we will give you a comprehensive quote with regards to PMI.